Is This Whole Foods’ Last Straw?

Whole Foods Market’s (Nasdaq: WFMI  ) founder and CEO John Mackey is no stranger to controversy. But earlier this week he took a stand on the health-care debate that may make a lot of the organic grocer’s coveted customers choke on their pesticide-free produce.

Thanks a lot, dude!
Mackey has always been outspoken in his views, even if his customers might disagree. For example, given Whole Foods' generally left-leaning clientele, his comparison of unions to herpes many years ago was perhaps a touch incendiary.

And no one can forget the Rahodeb scandal. Mackey's eight years of anonymously defending his store (and his haircut) on the Yahoo! Finance discussion boards didn’t go over too well with the public, much less federal regulators. (I believed it was rotten behavior. My Foolish colleague Rick Munarriz thought it wasn’t the big deal people thought it was. And another longtime Fool, Bill Mann, argued that people should lighten up -- of course the guy has an ego.)

Now, Mackey has published an op-ed in The Wall Street Journal outlining his suggestions for the ongoing health-care reform debate, with a focus on individual empowerment. Some of those who oppose his ideas, or simply favor the policies proposed by the Obama administration, are now calling for a good old-fashioned boycott. (Then again, those impressed by Mackey's views might be more inclined to visit the store now.) Significantly, the type of customers Whole Foods has traditionally targeted are more likely to passionately support the kind of public, universal health coverage Mackey's op-ed argues against.

Given the problems this stance could pose for the company, I'm sure many Whole Foods shareholders are ever so grateful that Mackey felt the need to speak up.

Define "progressive"
Personally, I support Mackey's public advocacy of alternative ideas. He’s one CEO trying to be part of the solution, not the problem -- and even if they're not delicately phrased, he often makes excellent points.

If anything, General Motors’ bankruptcy shows that Mackey’s quip about unions may have been too kind. Combined with management's own poor decisions, unions' costly and short-sighted demands proved more like a fatal disease to the automaker than an inconvenient and socially embarrassing one. That’s why longtime labor foe Wal-Mart's (NYSE: WMT  ) recent decision to team up with unions to support employer mandates practically dripped with irony. Whole Foods, Starbucks (Nasdaq: SBUX  ) , and Costco (Nasdaq: COST  ) are all good examples of companies that have made it a point to provide employee benefits without coercion.

Here’s another thought: Shouldn't the very people contemplating a Whole Foods boycott on these grounds applaud many of the company's existing initiatives? Are they aware of its progressive, employee-friendly policies? And if so, does this mean they don’t care as much as they think they do?

I mean, really, how dare Whole Foods let employees vote on their benefits, when most retail workers get no benefits whatsoever? The nerve of Mackey, forgoing his base salary and capping management's pay at 19 times that of his lowest-paid employee? What is Whole Foods thinking, donating part of its profits to local and global organizations working to make a positive difference? And giving the majority of its stock options to rank-and-file employees, rather than upper management? That's just diabolical!

Sometimes, trying to be part of the solution seems to challenges some people's assumptions about the way things are supposed to be. Mackey’s belief in conscious capitalism -- a world where responsible, entrepreneurial capitalists try to make things better, not worse, and where we all take greater responsibility for our own decisions -- might challenge some people's long-held assumptions. But it's a great thing to contemplate.

Another angle on "risk tolerance"
As a shareholder and a business analyst, I can't deny that Mackey's very public ideas about the controversial topic of health care reform are risky. With his stakeholder-centric view of business, Mackey knows very well that customers vote with their wallets. Indeed, the company’s stances on environmentalism, sustainability, animal welfare, and other themes all depend upon people giving their patronage to businesses that try to do the right thing.

However, I also suspect that many longtime shareholders know how Mackey rolls, and aren't fazed by dramatic stands like this one. I can't deny the real perils of an outspoken and controversial CEO, but I'd rather take this sort of risk than support the folly that ran companies like AIG (NYSE: AIG  ) , Bank of America (NYSE: BAC  ) , or Citigroup (NYSE: C  ) into the ground.

Whole Foods Market, Costco Wholesale, and Starbucks are Motley Fool Stock Advisor selections. Costco Wholesale, Starbucks, and Wal-Mart Stores are Motley Fool Inside Value recommendations. The Fool owns shares of Costco Wholesale and Starbucks. Try any of our Foolish newsletter services, free for 30 days.

Alyce Lomax owns shares of Whole Foods Market and Starbucks. The Fool's disclosure policy thinks we should all have an organic chocolate chip cookie and take a second to calm down.


Read/Post Comments (54) | Recommend This Article (63)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On August 14, 2009, at 5:10 PM, TMFMitten wrote:

    Any Whole Foods shopper who pays the least bit of attention to what Mackey has said over the years shouldn't be the least bit surprised by his proposal. I, for one, applaud his ability to think outside the box -- just because the president proposes a health plan, after all, that doesn't automatically mean it's the BEST plan. And it's not un-American to say so. :) Maybe some critics just need to loosen their partisan blinders a little bit. If anything, perhaps Mackey can illustrate that it's not always a battle of Left vs. Right.

  • Report this Comment On August 14, 2009, at 5:26 PM, whereaminow wrote:

    Mackey hits another home run. When I'm in America, I shop at Whole Foods. I do it because it's good food, but i also shop there to support a fellow libertarian.

    I definitely don't shop there to surround myself with Whole Foods' typical rent seeking progressive consumers. They love the motive power of the libertarian, but loath his views. So perfect. So right out of Atlas Shrugged.

    David in Qatar

  • Report this Comment On August 14, 2009, at 5:41 PM, privateis wrote:

    This Mackey guy sounds like someone I'd like to know.

    Taking responsiblity for our own decisions what a novel idea. Or how about work hard and not expect others to pay our way!

  • Report this Comment On August 14, 2009, at 6:03 PM, eddietheinvestor wrote:

    What proof is there that people who eat healthy food must be liberals and that Mackey's customers are liberals? Customers at Whole Foods don't have to identify their political party before paying. So before we argue whether Whole Foods will lose their customers because they are liberals, we should challenge this premise that healthy food eaters are liberals. The statement that health food eaters are liberals is a prejudiced point of view. And the idea of improving the current healthy care situation and improving Obama's plan is progressive. Why must we accept the current plan or Obama's plan as they are? What is wrong with change and progressive beliefs such as Mackey's? And if liberals are angry that Mackey exercised his freedom of speech to write an op-ed editorial and therefore will not shop at his stores, leaving alfalfa sprouts and fruits and turning instead to Big Macs and fries to make a political point, that's their choice. Good job, Mackey.Thanks for having the guts to share your opinion.

  • Report this Comment On August 14, 2009, at 6:06 PM, TMFSpeck wrote:

    Mackey's 'Obamacare'-is-socialism piece may appeal to some, but it comes off to me as self-serving and, ultimately, self-defeating.

    (Hey Alyce: where's the link to the original Op-Ed?)

  • Report this Comment On August 14, 2009, at 6:12 PM, TMFSpeck wrote:

    esterlin: I've made the choice to no longer shop at Whole Foods. I am not, however, "turning instead to Big Macs and fries to make a political point". I'm turning to my local farmers markets as long as they're running, I now have a membership in a local food co-op, and will be doing most of my other fresh food shopping at New Seasons here in Portland to, yes, make a political point.

    I, too, am glad that Mackey had the guts to tell us where he stands, but unlike him, I post here and on our discussion boards under my own username.

  • Report this Comment On August 14, 2009, at 6:12 PM, butternutt12 wrote:

    Mackey's ideas are just the status quo and do nothing to reign in costs. I have a high-deductible insurance policy. It is not a pathway to health care access, and would be better termed "catastrophic health insurance." I'll be paying for everything unless I get something nasty. Of course after that, I can be dropped and on the hook regardless, having paid into an "insurance" that was fake.

    Something has to be done about health care costs, in 10 years a simple doctor's visit with 1 x-ray may eat up an entire $3000 deductible. That Mackey advocates high-deductible insurance as part of the answer discredits his grasp on reality.

  • Report this Comment On August 14, 2009, at 6:17 PM, butternutt12 wrote:

    Just one other point: our tax dollars help fund some of the medical advances we enjoy (NIH, grants, academic research, etc.). That we exclude access or overprice health care for a large portion of our citizenry is not fair, and makes health care essentially welfare for the wealthy (we all pay for the rich to have access).

  • Report this Comment On August 14, 2009, at 6:18 PM, TMFLomax wrote:

    Link to the op-ed piece: http://online.wsj.com/article/SB2000142405297020425140457434...

    I hope that works. Sorry about that.

    Also a clarification to one bit in the article, Mackey forgoes base salary and management's salaries are capped at 19 times.

  • Report this Comment On August 14, 2009, at 6:38 PM, privateis wrote:

    If we all shopped for our health care like we do for our cars etc. The hospitals, doctors,labs, etc would have to compete for our dollar as in any other business. At the moment they set the prices they want with the insurance companies. I think we should have a trial plan for Obamas health care plan by having all government officials use it for a year. Lets see how fast the plan dies a quick and quite death.

  • Report this Comment On August 14, 2009, at 8:16 PM, deealpha wrote:

    totally agree. to date not a single senator or congressman/woman has agreed to use the obamacare package for themselves and family when challenged by the citizens (sheep) who have asked them at the "town hall meetings". not even the (current) president and biggest pusher of this plan is willing to make this commitment. personally i never trust a cook who refuses to eat his/her own cooking.

    as far as liberals being the only ones who patronize whole foods: i and my wife are far from it. we are proud members of the "gun toting vegetarian" political party.

  • Report this Comment On August 14, 2009, at 10:02 PM, joeyd134 wrote:

    2 important points that those defending slight tweaks to our current system, or a move towards more market control - like Mackey, seem to forget.

    1. We pay 2x what other countries pay for health care with worse quality. France, with a hybrid system, is number one. Health care in Canada is 9% of GDP, here it's over 20%.

    2. American companies can't compete as well with this health care liability on their balance sheets. This is part of why Crysler got dumped by it's German partner and a more complete picture of what happened at GM.

    Defending the health care industry's ability to do a better job without government involvement will hurt our country financially, not the other way around.

  • Report this Comment On August 15, 2009, at 12:29 AM, gailmgjjberg wrote:

    Whole Foods doesn't hire people over fourty.

  • Report this Comment On August 15, 2009, at 12:32 AM, JimboJones18 wrote:

    First it is kind of foolish to just point to GM to infer that Unions necessarily cause a business's downfall. You are dealing with one case where there are many potential causes. Any undergraduate who has taken an econometric class knows that this is not a valid means to inference. There are plenty of vibrant companies, just as every major Hollywood studio and UPS (the list goes on) who have unions and whose employees get better deals than being forced to vote for catastrophic insurance. If you are going to say unions cause companies to fail, I want to see real causal inference, not some mickey mouse anecdotal reasoning.

    How does Mackey's plan deal with the issue of insurance companies fighting to cover pre-conditions? How does his plan deal with insurance companies fighting to pay any sort of coverage? How does his plan get the 40 million insured? How does Mackey's plan create incentives for people to lead healthy lives? Perhaps as a start he could contribute to a healthier America by opening his own stores up to competition (What happened to wild oats) and thereby force himself to lower prices.

  • Report this Comment On August 15, 2009, at 1:28 AM, mlaursen wrote:

    re: "2. American companies can't compete as well with this health care liability on their balance sheets. This is part of why Crysler got dumped by it's German partner and a more complete picture of what happened at GM."

    Just like to note that the Obama plan doesn't do anything to decouple health insurance coverage from employment. In fact, it would reinforce that bad idea.

    Mackey's suggestions, on the other hand, did include ideas of how to decouple health insurance from employment.

    So, Mackey's plans would address you concern above while Obama's plan won't.

  • Report this Comment On August 15, 2009, at 1:38 AM, mlaursen wrote:

    re: "How does his plan get the 40 million insured?"

    Removing obstacles to high-deductible insurance and health savings accounts, extending tax deductions for insurance premiums to individuals, tax deductions for charitable contributions to pay insurance and health care costs for others. It's all right there in the editorial.

    <i>How does Mackey's plan create incentives for people to lead healthy lives?</i>

    Even the CBO's analysis of the Obamacare bill concluded that there isn't much public health care cost savings in creating incentives for people to lead healthier lives. In fact, it might increase health care costs.

    <i>Perhaps as a start he could contribute to a healthier America by opening his own stores up to competition (What happened to wild oats) and thereby force himself to lower prices.</i>

    That's just silly. Whole Foods has tons of competition. And there isn't some huge barrier to entry; the yuppy, upscale grocery market is wide open for any competitor who wants to give it a go.

  • Report this Comment On August 15, 2009, at 3:49 AM, jalapama wrote:

    When I entered the workforce there was no such thing as "health insurance" as far as I recall. What we had through our employer was "hospitalization insurance." The premis was that it covered catastrophes, not routine medical care. If I needed to got to the doctor I went to the doctor and paid for the visit (maybe $15 or $20 for a full visit, $3 if you just got an allergy shot from the nurse.)

    And then the unions, yes unions, decided they could squeeze out coverage for routine medical care in their contract and most union companies gave in. This started a trend that continued until a few years ago when HSAs were created.

    HSAs harken back to the days of "hospitalization insurance" but with an added benefit. You can actually pay your medical bills with tax-free dollars by putting away money each payday in an HSA account. It is possible your company will also contribute. Deposits to this account are like IRA investments except your income doesn't matter.. All that matters is your "hospitalization" deductibile. I personlly put $2300 per year in ($47.50 per week) and have a high deductible policy that kicks in after I pay my $2700 deductible. Very nicely my employer kicks in $400 each year so ALL of my medical bills are paid with tax free dollars. Oh yeah, my "catastrophic" policy costs me a bit over $5.00 per week.

    Since I switched to this plan 3 years ago I have needed few medical services. I paid for these out of my pocket and left my HSA intact. The balance in that account now approaches $9,000. I could use this account to buy aspirin or most any other OTC product, but I don't. It's there for a catastrophe and it costs me less p er year than those selecting a "traditional plan" that pays for "routine visits" with a nominal co-pay. Guess why? Those people go to the doctor at the first stuffy nose. After all, it's almost "free" to them.

    But me, should I come down with some catastrophic disease in next week I will pay nothing out of my pocket because I will use my HSA account. I have enough to cover almost three years of deductibles and copays (max $5000 out of pocket per year).

    If you offer something for free or really cheap, it will get overused. That's the unions' contribution to the health care crisis.

    But the real villains are the over-abundance of plaintiff's attorneys. I received a new phone book the other day and was stunned to realize that nearly 20% of the book was advertising for attorneys! Without continuing this rather lengthy post I will just say that the legal profession (unfortunately, I use the term profession 90% in jest) has made it impossible for the medical profession (only used 20% in jest) to treat patients as patients instead of as potential litigants. Tests are ordered which are not really justified just to create a paper trail of "no mistakes."

    Some other time I'll expound on how Medicare and Medicaid profoundly changed the quality of care in this country. WARNING: It won't be for the good they have done.

  • Report this Comment On August 15, 2009, at 9:20 AM, reminon wrote:

    When I was 5 and in a terrible car accident, needing tens of thousands of dollars worth of tests and surgeries, my family's health insurer made every attempt not to cover any of the cost. The company probably would have been happy just to let me die in the hospital while they pocketed my parents' investment. You can rant and rave all you want about the 'evils' of unions, Medicare, and Medicaid. I can complain about shoddy business practices. The point is that different people have vastly different experiences with health care. Just because some people can afford to invest in health care savings plans doesn't mean everyone can. Some people just make enough money to support their families. But I guess we don't matter. :(

  • Report this Comment On August 15, 2009, at 9:56 AM, mlaursen wrote:

    reminon, I don't get it. Because health insurance companies have tried to screw their customers, how does it follow that government-provided health care won't screw over citizens in a similar manner? Why do you have such trust of the kindness and generosity of the government?

  • Report this Comment On August 15, 2009, at 11:27 AM, JimboJones18 wrote:

    mlaursen you still aren't addressing many important questions just as Mackey failed to do.

    What about the folks with pre-conditions? How does Mackey's plan prevent insurance companies from building wasteful bureaucracies whose only purpose is to deny coverage that the insurance supposedly covered?

    Also, I'm skeptical that increased competition, transparency, tax breaks and voluntary contributions will really provide adequate coverage. First there aren't empirical cases for this so it is speculation. This speculation could reside in misguided assumptions. For example, states have tried capping lawsuit awards against doctors and from everything that I have read, it hasn't lowered premiums.

    Moreover, insurance suffers from a moral hazard problem. A person who is young and healthy might chose not to buy health insurance. When they are middle-aged perhaps they will. Since only folks with high-risks are buying insurance premiums are high on top of a high deductible. Perhaps this young person would be better off if everyone bought insurance despite their risk. Perhaps everyone would be better off, because this would smooth their consumption. The free market cannot generate this outcome. Theoretically at least, this is a reason that the free market under-provides insurance.

    With regards to the denial of coverage trusting the kindness of the government is not the issue. Governments have different incentives than insurance companies. Insurance companies profit from denying care to patients and profit is the objective that insurance companies pursue. Governments don't profit from denying care to patients.

  • Report this Comment On August 15, 2009, at 12:02 PM, deealpha wrote:

    “The problem with socialism is that eventually you run out

    of other people’s money.”

    —Margaret Thatcher

    social security--the government managed retirement plan--bankrupt.

    medicare and medicaid--the government managed medical plan--bankrupt

    u.s. postal service--the government managed delivery service--bankrupt

    amtrack--the government managed train service--bankrupt

    california--the government run state--bankrupt.......

    fanniemay and freddiemac--the government lending institutions----bankrupt.............

    bankrupt except the government can fill the social security lock box with iou promises , sell china more treasury promises, or just outright dump the cost onto your children, your grandchildren and great grandchildren.

  • Report this Comment On August 15, 2009, at 1:42 PM, crad1111 wrote:

    Facts are very important.

    social security & medicare are not bankrupt.

    They are projected to have a shortfall , runout of money , whatever.

    No one seems to remember that social security had a huge ( trillion $) trust fund & was growing, until about 1982-83 when Reagan & congress approved the 1st "borrowing " , or tapping into those funds to fund other programs. until subsequent presidents have depleted the entire multi trillion $$ fund. Never having repaid any of it back.

    remember the Perot-Bush-Clinton years ???

    2/3 of the debt owed was to our SS trust fund !!!

    Any business or program will go broke when funds are plundered in any, let alone massive amounts.

    Medicare ?? medicare was very effecient & self-sustaining until about 3-4 years ago when Bush & congress approved a massive plundering by Hmos & drug companies. Medicare could no longer negotiage for medicines , but had to pay whatever prices Pharma demanded !! Is this Capitalism ?? or fair market ???

    I have watched many med prices triple since then !! or the billions of $$'s paid to HMOs for their bogus "advantage " programs .

    the typical administartive cost at an HMO is around 63% , where medicare's was 6%.

    I can keep going on & on.

  • Report this Comment On August 15, 2009, at 4:29 PM, guiganol wrote:

    To the author of this article: nice try! But business for WF is in big trouble and so is its stock price.

    The ABC news piece put it pretty succinctly when they mentioned concern over alienating the activist-minded demographic of their clientele. I mean, organic coffee is all fine and dandy but people don't spend the extra money above that on shade-grown coffee because it tastes better. It's to stop clear-cutting. These people put their money where their mouth is.

    Call 'em what you like, but the simple fact of the matter is: "What was Mackey thinking?" Check out the Whole Foods website forum and you'll see exactly how many "I'm never going there again and I'm telling all my friends to do the same" posts.

    You want to see the free market in action? See what "responsible, idealistic" shoppers do in response to his little op-ed piece.

    This is just, by far, one of the dumbest business decisions a person could make.

    I don't play the short game, but I'm really tempted to get a piece of this one. And I can't wait for their next quarterly report!

  • Report this Comment On August 15, 2009, at 10:56 PM, madmilker wrote:

    Whole Foods don't have their Global Procurement Office in China.

    Whole Foods don't have a big single STAR in their name.

    People in America need to realize jus what got America in this shape…”cheap” yes so-call cheap items from a foreign land.

    quote*Wal-Mart firmly believes in local procurement. We recognize that by purchasing quality products, we can generate more job opportunities, support local manufacturing and boost economic development. Over 95% of the merchandise in our stores in China is sourced locally. We have established partnerships with nearly 20,000 suppliers in China. *end quote!

    Now! if there be 182 country’s making items for the world to buy and they have only 5% of the pie in China…duh! This company makes the nice people of China support their currency(yuan) by keeping it in their country working for the people there…. but with the “yuan” going up in value and the US dollar going down…all the foreign items that the American consumer buys thinking it is cheap has went up in price.

    People…its all about the currency and to keep a currency strong you got to keep it floating around the country you live in so it can work for you. For the past 12 years all them US dollars are being shipped overseas to a foreign bank and with the American worker not making anything for the foreigner to buy the “we the people” have to turn to the “second” largest employer in America(Uncle Sam) to sell “we the people” debt in order to get all them dollars back!

    50 years ago a foreigner would had given their left nut for a US dollar or a Hershey’s chocolate bar and today the same foreigner has got Uncle Sam and the American consumer by both all the while Hershey is moving the chocolate factory to Mexico. Wake up! America and think “MADE IN AMERICA.”

    quote*"Considering that there are over 30,000 ships at sea this morning," writes James Carlton, director of the Williams College-Mystic Seaport Maritime Studies Program, in an e-mail, "the total number of organisms and species in this global 'bioflow' on the morning your readers read your piece could be staggering - billions of individuals, and thousands of species."

    Indeed, scientists have long considered ballast water the primary way invasive aquatic organisms are introduced. From the zebra mussel's arrival in the Great Lakes, to an American jellyfish severely disrupting Black Sea fisheries, the potential costs of accidental introduction of a species to new homes can be tremendous. Aquatic invasives cost the US $9 billion yearly, according to estimates by David Pimentel, professor emeritus of ecology and evolutionary biology at Cornell University in Ithaca, N.Y. Zebra and quagga mussels (a cousin to the zebra) alone cost the $1 billion annually.*end quote!

    tat is $9 billion a year in hidden taxes to all Americans...

    cheap ain't chic and it cost America............jobs!

  • Report this Comment On August 16, 2009, at 12:16 AM, redrockraven wrote:

    My wife and I have been shopping regularly at Whole Foods in Las Vegas for over 10 years. We sincerely thank the business CEO for providing his view of the health care issues facing the US. Since Mr. Mackey's views appear to be a direct contradiction to the healthy living ideals that we have until now believed that their stores promote, my wife and I will be taking our business to another store.

    We do not intend to continue to support a hypocritical business that believes more in lining their own pockets and shortchanging their employees health plans than in promoting the health and welfare of their customers and employees.

  • Report this Comment On August 16, 2009, at 1:15 AM, mlaursen wrote:

    <i>How does Mackey's plan prevent insurance companies from building wasteful bureaucracies whose only purpose is to deny coverage that the insurance supposedly covered?</i>

    How does the Obamacare plan prevent the government from building wasteful bureaucracies whose only purpose it to deny coverage that the universal health care supposedly will provide?

  • Report this Comment On August 16, 2009, at 1:18 AM, mlaursen wrote:

    <i>What about the folks with pre-conditions?</i>

    It's not like I'm in love with the insurance business. What about some *moderate* government measures like clear-cut laws about denying coverage or rescinding polices? What about a more straightforward plan for providing health care for hardship cases without forcing everyone to participate in a politicized health care system?

  • Report this Comment On August 16, 2009, at 1:20 AM, mlaursen wrote:

    <i>Also, I'm skeptical that increased competition, transparency, tax breaks and voluntary contributions will really provide adequate coverage. First there aren't empirical cases for this so it is speculation.</i>

    How can we gain experience at solving problems with voluntarism and lightweight government when people like you alway insist on central authority and massive government?

  • Report this Comment On August 16, 2009, at 1:23 AM, mlaursen wrote:

    <i>Governments don't profit from denying care to patients.</i>

    Just not true. At some point, governments have to keep to a budget. The United States has been able to really stretch itself debt-wise, but the day when it cannot be sustained is coming soon.

  • Report this Comment On August 16, 2009, at 1:34 PM, terrisca wrote:

    I can not understand why CEOs don't want to 'externalize' health costs. Private industry got us into this mess by offering 'benefits' that disappeared when you no longer had a job. Wait a minute - I get it now. It's a threat to keep your crappy job. Is this an example of the faulty Libertarian brain?

  • Report this Comment On August 16, 2009, at 1:40 PM, terrisca wrote:

    mlaursen - You're uninformed regarding how the Fed operates. The Fed is in complete control of the money supply. Although there is a real cost to operating the presses, it's nothing.

    When it comes to war, Republicans don't care where the money comes from. That's because war is profitable. Print baby! But when it comes to a poor black woman getting a bypass, yeah, they have a big problem with 'welfare.' That little old lady's gonna bankrupt us etc..

    This is simply a matter of values. Profit-or-die for the rich versus I-don't-want-to-die for the rest of us.

  • Report this Comment On August 17, 2009, at 12:06 AM, mlaursen wrote:

    <i>mlaursen - You're uninformed regarding how the Fed operates. The Fed is in complete control of the money supply. Although there is a real cost to operating the presses, it's nothing.</i>

    Took me a minute to figure out what you were talking about, since I hadn't made any reference to the Fed. Anyway, you need to learn more about how the Fed operates. Its Open Market Committee monetizes Treasury debt by buying it up with money "printed" out of thin air (actually, it's created electronically these days). But the ability of the Fed and the Treasury to continue playing this game depends on the continued willingness of investors to buy Treasury-issued securities.

    I'm sure I dislike war-mongering Republicans as much as you do, but what makes you think war-mongering and running up debt are exclusively Republican passtimes?

  • Report this Comment On August 17, 2009, at 12:12 AM, mlaursen wrote:

    <i>Private industry got us into this mess by offering 'benefits' that disappeared when you no longer had a job. Wait a minute - I get it now. It's a threat to keep your crappy job.</i>

    Well, sort of. To get around wage controls during World War II, employers, having a hard time retaining the staffing levels they needed, started offering health benefits as a way of getting around the compensation limits.

    After the war, tax breaks encouraging the practice were ensconced into corporate tax law.

    I don't see, though, that offering health insurance or other perks in addition to cash wages would be a "threat". It's compensation. Employers give employees compensation, because, like, if they didn't, not many people would want to go to work every day.

  • Report this Comment On August 17, 2009, at 2:01 AM, Imaflex wrote:

    Hey, I invest and I expect corporate sincerity.

    John Mackey's corporate sincerity index is ).

    Make money today on a real fool's word's..sell WFMI short.

  • Report this Comment On August 17, 2009, at 5:00 AM, insomnia wrote:

    The issue isn't the relative merits of Mackey's plan. The issue is whether his comments help Whole Foods and its investors.

    ... and clearly, they do not.

    The profit margin for supermarkets is quite low, so for Mackey to first refer to some of his products as "junk", and then to let Murdoch's WSJ use him for political purposes, in a way that is encouraging tens of thousands Facebook and Twitter users to organize a boycott and even picketing against the company... well, this is hardly helpful.

    I fully expect unions will soon get in the act, taking this opportunity to hurt Whole Foods for their behavior and encouraging unionized employees not to shop there, if not trying to unionize Whole Foods itself.

    Basically, Mackey has painted a big target on Whole Foods, which will face greatly increased scrutiny... which will drag down both the profitability and the share price.

    The shareholders should brush Mackey aside, because regardless of his ideology, what is clearly missing in this case is tact. Whole Foods is about the easiest company in the world to maintain good PR with, but his behavior has permanently damaged his relation to the customer will draw increased scrutiny from corporate watchdogs.

    I'm selling my shares today. I see I'm not the only one. Shorting WFMI is a pretty safe bet in the short term, I suspect.

  • Report this Comment On August 17, 2009, at 10:06 AM, JimboJones18 wrote:

    <i>Governments don't profit from denying care to patients.</i>

    <i>Just not true. At some point, governments have to keep to a budget. The United States has been able to really stretch itself debt-wise, but the day when it cannot be sustained is coming soon.<i>

    There is a difference between the constraints of a government's budget and a insurance company's profit. The profit of an insurance company consists of resources that are not being spent on patients. Its as if the government had to keep a budget but also had an incentive to extract as many resources from this budget and give them to a third party.

  • Report this Comment On August 17, 2009, at 10:15 AM, JimboJones18 wrote:

    "It's not like I'm in love with the insurance business. What about some *moderate* government measures like clear-cut laws about denying coverage or rescinding polices? What about a more straightforward plan for providing health care for hardship cases without forcing everyone to participate in a politicized health care system?"

    Ok, but now you diverge from Mackey, who argues that we should not mandate what insurance companies cover. Mackey argues that this exacerbates costs. If insurance companies cannot deny coverage and we don't force people to buy coverage, don't we create incentives for people to wait until they are sick to buy coverage? This seems like it would make insurance quite expensive.

  • Report this Comment On August 17, 2009, at 2:51 PM, ejclason2 wrote:

    I haven't been following the Whole Foods/Mackey hub-bub, so I may be talking out of turn, but...

    There's an old saying: "The best form of government is a benevolent dictatorship." Unfortunately there's no way to guarantee benevolence once you've elevated someone to dictator.

    Sounds like if all companys were run like Whole Foods, unions won't be needed. But that's not going to happen any more than if no one broke the law we could get rid of cops (and save a bunch of tax payer dollars).

    OK, I'd better stop typing before the bad metaphor police arrest me :-)

  • Report this Comment On August 17, 2009, at 4:58 PM, mlaursen wrote:

    <i>Ok, but now you diverge from Mackey, who argues that we should not mandate what insurance companies cover.</i>

    I think Mackey made several good points. That doesn't mean that I see exactly eye-to-eye with him. I just can't believe people that supposedly believe in human rights, including freedom of speech, would boycott a business owned by someone who politely offered criticism of a major parcel of proposed legislation, and even offered his own suggestions, many of which were excellent.

  • Report this Comment On August 17, 2009, at 6:13 PM, snesich wrote:

    I think David and Tom have allowed their political biases to cloud what should be clear headed, objective analysis.

    They may hate President Obama and the Democrats. And they may hate the type of people who typically shop at Whole Foods and similar stores. I have no way of knowing whether they do or not.

    However, Whole Foods customers are smart, educated, well-informed and net savvy, for the most part. They aren't your typical grocery store customers.

    For David and Tom to downplay or even mock the idea that Mackey's comments could drive away a significant number of Whole Foods customers is essentially wishful thinking on their part.

    David and Tom don't like the idea of Whole Foods losing business because of Mackey's outspoken right-wing views. So, they pretend that there isn't any chance of that happening.

    Hey boys, we know you don't like "those liberals". But you should be mature enough and wise enough and smart enough to understand that your personal feelings (or frat boy sensibilities) don't necessarily provide the investor community with the level headed information they are seeking.

    If you think that the typical Whole Foods customer won't hear about this---and that there aren't numerous shopping alternatives in most geographic areas---you're either naive or engaged in some wishful thinking or both.

  • Report this Comment On August 17, 2009, at 6:40 PM, muzzybelly wrote:

    The normal rules of competition don't apply to health care, for a number of reasons. I'm sure you've heard all of them. Among economists, they are known by fancy names like asymmetrical information, supplier-induced demand, bounded rationality and adverse selection. Some conservative economists also like to frame the question in terms of moral hazard, but that's a weak argument in light of the available data about American health habits and those of countries with universal service.

    But you don't need to study health econ to notice some very interesting facts. For instance, have you noticed that doctors and hospitals charge much higher prices to patients who lack health insurance than they pay to the insurers? In a regular competitive market, that could never happen: the non-insured patients are the marginal customers who are price-sensitive. Insured patients don't care about cost. So a rational actor in a competitive market would lower prices for non-insureds to attract the additional business, while keeping prices higher for insured patients who will come anyway.

    I don't think Mackey has any idea what he is talking about. He is just applying abstract ideological principles to infer what he thinks should happen in a world that resembles the ones of his assumptions. There are lots of experts who study the world we live in and nearly all of them say his ideas are pretty silly.

    Remember Greenspan relied on those same ideological principles. Assuming that the self-interest of banks and financial institutions would guarantee that they would do a good job managing risk and self-regulating their practices. Oops.

  • Report this Comment On August 17, 2009, at 6:44 PM, muzzybelly wrote:

    As far as shorting WFMI, there are two reasons to think about it:

    1. Liberal shareholders will dump their shares because they don't want to support Mackey;

    2. Liberal customers will boycott the store.

    #1 is almost certain to have no effect on stock price. Any shares sold by liberals will be bought by others who don't care.

    #2 is hard to assess. I've read a ton of comments on line about how liberals will boycott. But that's a self-selecting sample, of people who feel strongly enough about the issue to post. It doesn't necessarily reflect the opinions of the bulk of the clientele. Those people also might be acting strategically, in the hopes of forcing the board to discipline or fire Mackey.

    The Facebok page for boycotting Whole Foods has 11,000 members, according to NYT. That's a lot of people. But it's a tiny % of Whole Food customers.

    My sense is that Whole Foods will see a downturn in business in the short run, but it might not be terribly large as a percentage of sales.

  • Report this Comment On August 18, 2009, at 12:43 AM, mlaursen wrote:

    re: I think David and Tom have allowed their political biases to cloud what should be clear headed, objective analysis.

    David and Tom didn't write this article. Alyce Lomax did. Their pictures are just on an ad inset into the story text.

  • Report this Comment On August 18, 2009, at 12:47 AM, mlaursen wrote:

    re: "But you don't need to study health econ to notice some very interesting facts."

    One must be careful ascribing blame to capitalism or socialism when looking at our current health care system. It's a total mixed-economy mish-mash.

  • Report this Comment On August 18, 2009, at 1:27 AM, TMFLomax wrote:

    That's right, David and Tom had nothing to do with writing this article; I'm the author (and since I'm a female, I certainly don't have frat boy sensibilities). Nowhere did I shrug this off and say that Whole Foods customers "won't hear about it" or that I hate Whole Foods customers or any such thing. Clearly this has a high profile in the media. Mostly in this article I wanted to point out that it seems interesting (ironic, really) that the boycotting contingent would be so angry at a company (and a CEO) that has spear-headed so many worker-friendly initiatives. I'm pretty sure that point is made pretty clear in the article though...?

    I was also completely honest and I believe clear in the article, stating that having an outspoken CEO and one who talks about a controversial topic such as this IS a risk to shareholders, given the idea that it might cause such a backlash (of course no company is risk-free and we all judge what risks we are willing to take when we invest, at least of the ones we can determine). However, I (personally) felt compelled to defend Mackey's right to say what he did. I also believe he made some rational points in a debate that had become kind of hysterical in a lot of other quarters. Maybe his editorial lost people somewhere around the word "socialism" (yes, right at the beginning) and few people were willing to actually read the whole thing rationally and take away anything of value from it. That would be a shame if we were all that quick to outrage and that unwilling to listen to one another, just quickly dismissing because we're so certain right at the get-go that we'll completely disagree.

    I also apologize for painting Whole Foods' clientele with such a broad brush, I know many different types of people do shop there (of course there are gun-owning vegetarians!), but many of the issues they care about generally fall on one side of the spectrum, socially anyway. The boycotters seem to be also assuming they're the major clientele, but I suppose they may be overestimating that by a bit...

    The article was just this one Fool's opinion. Take it or leave it, I would always encourage people to take or leave my opinion. But I wanted to clarify, and certainly clarify that I never shrugged this off or said there was no risk for shareholders, in fact I said the opposite. I also made the point that many long-time shareholders are likely pretty well versed in Mackey's views and not too terribly surprised. And those Whole Foods shareholders who are shocked, well, maybe those are the investors who don't look very hard at their companies' managements? There is plenty of information on John Mackey's views and philosophy on the Internet, including speeches and debates and blog posts he's made (under his own name, too, I might add). It's Foolish to know companies' managements and try to have a little bit of a handle on who's running companies, and Mackey has been one of the rare CEOs who is willing to actually speak out philosophically about who he is and his views about business.

    Mlaursen, as always, thanks for your comments, by the way. I always enjoy them.

    Best,

    Alyce

  • Report this Comment On August 18, 2009, at 4:38 AM, AnnaDcc wrote:

    I could give a rat's ass what the CEO of Whole Foods things about healthcare. It takes a lot to get me to shop there (usually consisting of alternate, more fairly priced health food stores being closed). I might stop shopping there if the CEO blatantly advocated destroying the environment (since environmental destruction is directly related to our need to buy overpriced organics), or if he bought a huge stake in a pharmaceutical company (whose mission it seems to be to keep nutraceutical alternatives as far from the public eye as possible), as these things might tick me of enough to get me to wait til morning when the affordable health food stores opened, even though I really wanted that stevia, etc. now. I wouldn't stop shopping there just because of his views on mostly unrelated issues, like health care, abortion, religion, sexuality, etc. Shopping at Whole Foods is an act of desperation. Once 24 hour groceries really get good at keeping the right organics and nutraceuticals on their shelves, Whole Foods will fall apart on cost-related reasons alone. Their CEO's views on healthcare will have nothing to do with this.

  • Report this Comment On August 18, 2009, at 11:47 AM, JimboJones18 wrote:

    re: "I think Mackey made several good points. That doesn't mean that I see exactly eye-to-eye with him. I just can't believe people that supposedly believe in human rights, including freedom of speech, would boycott a business owned by someone who politely offered criticism of a major parcel of proposed legislation, and even offered his own suggestions, many of which were excellent."

    Mackey's plan does not prevent insurance companies from denying insurance to individuals with pre-conditions and from dragging patients through long and costly court battles to deny necessary and viable medical procedures. This is one of the most fundamental problems with the health care system. Disagreement with Mackey on this point strikes me as a pretty fundamental disagreement with his entire approach to health care. Given the moral hazard issues that arise with insurance, there isn't an easy fix on this point.

    Please note that in my posts, I simply pointed out that Mackey's plan fails to address the major challenges that heath care reform should address. I didn't mention anything about a boycott.

  • Report this Comment On August 18, 2009, at 1:32 PM, mlaursen wrote:

    Jimbo, I apologize for assuming that you're one of the boycotters. Mackey's, and Obama's, proposals have plus and minuses that are worth discussing. I just have a hard time with people who are closed-minded partisans, whether Republican, Democrat, Libertarian, Green, or whatever.

  • Report this Comment On August 19, 2009, at 11:26 AM, JimboJones18 wrote:

    re: " Jimbo, I apologize for assuming that you're one of the boycotters. Mackey's, and Obama's, proposals have plus and minuses that are worth discussing. I just have a hard time with people who are closed-minded partisans, whether Republican, Democrat, Libertarian, Green, or whatever."

    Fair enough. I'm not a big fan of closed-minded partisans either. Oh and sorry I meant that adverse selection, rather than moral hazard in my above posts. I would agree with another commenter that moral hazard doesn't have a huge effect on insurance costs empirically.

  • Report this Comment On August 20, 2009, at 2:25 PM, JFStorm wrote:

    He lost this customer forever. Not only because my politics are offended, but because he seems to feel the need to combine politics with his business in the first place. Quite simply, the forum is inappropriate.

    There are other options (Trader Joe's, small business health food shops, etc) where I thankfully am not informed of the political views of the ownership. Therefore they don't run the risk of offending me and running me out of their store.

  • Report this Comment On August 20, 2009, at 6:31 PM, Annie1139 wrote:

    Alyce - I'm someone who shops at WF, although it's not my primary food source. I like some of Mackey's other, non-health care-related ideas, and am appalled by a few. The thing that has me furious about this latest WSJ op-ed is that, contrary to what so many keep writing, I see absolutely nothing new, refreshing, useful, thoughtful, or even provocative. If we were not currently engaged in a poisonous screaming fight on how to reform health care in the U.S., with one side insisting that the status quo is just fine when it quite obviously isn't, it would be interesting to see Mackey's thoughts on the subject. But we do have a huge problem here and Mackey's article, rather than offering anything new or useful is a sad combination of the regurgitation of one side's talking points and points from a typical libertarian fantasy world. It contributed absolutely nothing to the actually obtaining affordable health care for those who need it most, but rather played to those who are the most selfish among us while trading on the success Mackey has achieved at least in part by appealing to those who indeed put their money where their mouth is when it comes to social responsibility.

  • Report this Comment On August 20, 2009, at 8:10 PM, warrenrial wrote:

    Will Whole Foods be coming to Burger King?

  • Report this Comment On August 21, 2009, at 12:28 PM, jeffknows wrote:

    Have you ever watched a pack of jackals hunt? Six or seven of them can take down a lion by encircling it and attacking it from the rear where it cannot see the attack coming. When the king of beasts spins around to defend itself, which ever jackal he cannot now see attacks. This goes on for hours until the lion finally succumbs to exhaustion, whereupon the entire pack attacks and tears it to shreds. That's what the left does to any person or organization with whom it disagrees. They do this because they hate America, they hate free speech and more than anything else, they hate capitalism and successful people like John Mackey.

  • Report this Comment On August 22, 2009, at 12:21 PM, CrustyEnd wrote:

    I do not understand the movement to boycott Whole Foods. It's a great company that supports a lot of high quality American farming. America needs more companies like Whole Foods not less, and a boycott would do more harm than good. If you want to change Mackey's mind about something, why don't you find a way that doesn't jeopardize the jobs of his hard working employees and suppliers?

    I don't agree with everything Mackey says, but I think he hits the nail on the head when he talks about the "need to address the root causes of poor health" and the fact that "many of our health-care problems are self-inflicted: two-thirds of Americans are now overweight and one-third are obese"

    You'd never hear a politician say this, which is part of the problem.

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 964637, ~/Articles/ArticleHandler.aspx, 10/25/2014 3:59:26 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 18 hours ago Sponsored by:
DOW 16,805.41 127.51 0.76%
S&P 500 1,964.58 13.76 0.71%
NASD 4,483.72 30.92 0.69%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/24/2014 3:59 PM
WFM $37.71 Down -0.32 -0.84%
Whole Foods Market CAPS Rating: ****
AIG $52.16 Up +0.54 +1.05%
American Internati… CAPS Rating: ****
BAC $16.72 Up +0.12 +0.72%
Bank of America CAPS Rating: ****
C $51.80 Up +0.39 +0.76%
Citigroup Inc CAPS Rating: ***
COST $130.44 Down -0.15 -0.11%
Costco Wholesale CAPS Rating: *****
SBUX $75.81 Up +0.97 +1.30%
Starbucks CAPS Rating: ****
WMT $76.38 Up +0.13 +0.17%
Wal-Mart Stores CAPS Rating: ***

Advertisement